It would be very convenient to have a day trading system that worked under all conceivable conditions without fail. Whether the market was consolidating, trending upward, or trending downward the ideal system would churn out profits regardless of prevailing market conditions. Unfortunately, no system adequately deals with varying market conditions that can arise throughout the course of their daily trading session. Obviously, this causes problems for novice and experienced traders alike.

One of the very real problems that day traders experience is adjusting their trading style to the changing personality of the futures market. The very best metaphor that I can conjure is one of fishing. To say the least, fishing is a fickle pastime to engage in. There are days that fish attack a certain type of lure, yet the very next day the exact lure will prove to be of little value. On some days, you’re choice of lures may change throughout the course of the day. The point is a simple one, what works at one point of the day may not work later in the day, or even the next day. In fishing, you have to be flexible and adjust your fishing style and bait to meet the ever changing water and weather conditions.

It’s really not so different when trading. On certain days one set up will consistently result  in profits. On the other hand, the very next day the same set up will produce nothing but losses. I don’t have a rational explanation for this phenomenon other than explaining the market is constantly changing and evolving. Your ability to determine which trades will be a profitable on a certain day is a core skill.

For example, on most days the market tends to honor support and resistance levels. Time and time again the price action will advance and decline to previous support and resistance levels and change direction. Of course, this makes for some very accurate trading for those who are familiar with trading support and resistance. On the very next day however, the market may pay no attention to support and resistance and blast through your support and resistance level as though they did not exist.

What does this mean for you as a trader?

It is essential that you have a number of trades in your trading arsenal and approach the next trading opportunity with a different set up. In my experience, after a few test trades I can usually find the trading setup that is effective for that day. On the other hand, many traders labor away with their preset trading style and endure substantial losses. It is imperative that you ascertain the mood and tenor of the market so that you’re able to match appropriate trades to that day’s particular trading session.

This takes some experience and experimentation to perfect. However it is imperative to adjust your trading style within the overall framework of your trading methodology to meet with changing market conditions. Staying with a trade that worke yesterday but is not working today will results in certain losses. In my own trading, I use a number of setups based upon price action, indicators, and oscillators. I have yet to find a day that one of these indicators would not set up a profitable trade. The secret is to find which setups and/or configurations of setups that will be most effective.

I do say this was one caveat; it is very difficult to trade consolidating markets and I have yet to find a truly effective methodology to profit in markets that are trading in a very narrow range. It is my recommendation that you avoid trading markets that are range bound as they are generally difficult and unprofitable to trade.

- About the Author: Learn to trade from a full time trader. All active members may attend FREE daily trading room and receive nightly market recap video (a $495 value). Click here and get your free videos and FREE live trading room. Article Source

Penny stock investing has always been related as a money situation for anyone. The relation of money and the payoff on investment (ROI) foretell a sizeable function in drawing greater investment in Small-Cap Penny stock companies. As a first time swing trader, many people are unaware of the leaps and bounces that a Small-Cap Penny stock market has to provide. Things like risk management and company studies are new vocabulary for an uneducated Small-Cap Penny stock swing trader. At times, day trading in Small-Cap Penny stocks provide sharp volatility, which makes Momentum Trading an intense task for certain investors and traders. Here is particular Info that could provide you with considering a wise investment decision in Small-Cap Penny stocks.

Volatility Factor: Small-Cap Penny stock markets at times can be very unstable. The trading session highs and lows may exhibit notable differences. You might see your investment rally 100% one day next loose 50% the next. So, always be sure to lock-in profits if you are not sure about the fundamentals of the Small-Cap Penny stock company.

Inquiries: Doing a bit of investigation before choosing on the penny stock portfolio is significant. Try and be sure to add those Small-Cap Penny stock companies to your portfolio that have a compelling foundation and great fundamentals. Keeping the volatility consideration aside, such penny stocks are projected to yield you profitable returns in the longer run. The management due diligence or the order research of the company is also a well-mannered indication. Make sure that you additionally do a bit of debt investigation of the company in detail. These research tools always help you in understanding where the penny stock will endure over a general period of time.

Embrace your Penny Stock: It’s not every day you’ll find a stock to trade in.  As a matter of fact, you’ll no doubt turn down a hundred or more for every notable investment you uncover. Once you uncover a good one hold tight. The penny stock immediately may not commence to show profits but delightful news about the company can constantly activate a rally in the stock.

Investment Designing: Planning your investment is the means to the success of your investment. Make sure to invest a particular allocation of your earning into penny stocks.  This leads to healthier risk and investment management.

I hope these comments provide you comprehend the methodology of investing in Small-Cap Penny stocks.

The Stock Wizards is a top notch stock expert providing research based Small-Cap Penny stock quotes. For more information click your mouse onto: http://thestockwizards.Net/

- About the Author: The Stock Wizards is a Premiere Financial Portal & Investor Relations Firm that brings a wealth of trading resources to Small Cap Investors. We analyze daily market activity and provide our members with hot stocks to watch every day. We follow certain patterns and bring you break out alerts, volume spikes, breaking news, mergers and upward trends.   Article Source

It seems there is a chorus of marketers hawking a variety of Forex and e-mini day trading programs on the Internet. There are promises of fast cash, 1000% returns, and guaranteed methods of trading. Nothing could be farther from the truth. Learning to trade is a skill, much like the skill set required for any job. This skill set is not acquired instantly from reading an e-book or buying a trading course. This is not to say that buying a trading course is a bad idea, in fact, it’s a great idea. But to trade effectively you need to give yourself some time to learn trading methodology, market psychology and acclimate yourself to the trading environment.

I encourage everyone to learn e-mini day trading, but I caution against running headlong into the market place with expectations that are not realistic. The first few months of trading can be disastrous without proper preparation and experience.

1. Most Novice Traders Tend to over Trade.

When considering an e-mini day trading opportunity it is important to weigh a number of factors and assess the probability of the trade being successful. Relying on rote oscillator signals or similar rate of change indicators without fully assessing the price action in the e-mini contract being traded is the recipe for failure. It is important to firmly understand the current trend in the market and the size of your e-mini futures account before entering any trade.

I regularly see new traders taking 10 to 15 trades a day. Rarely are there are this many trading opportunities during a trading session. Experience has taught me that there are 5 to 8 good trading setups each day, sometimes less.  Why do novice traders tend to over trade?

A typical reason for over trading is “chasing the market.” New traders tend to pile into trades late, usually just-in-time for the directional movement of the market to change. There are a variety of reasons new traders tend to chase the market, for the most common reason for this phenomenon is taking every single trade indicated by an oscillator or indicator. It is important to use a multi-threaded system to filter your trades in a manner that eliminates some of lower probability trades. Trade filtering is one of the most important components of any trading system. Some trading systems use trending markets and agreement between several indicators to indicate a trade. There are many filtering systems on the market and all good trading programs filter trades in some manner.

2. Most Novice Traders Tend to Trade to Many Contracts

Money management in your e-mini futures trading account is the skill that will enable traders to remain in the market for an extended period of time. On the other hand, trading the maximum number of contracts your account is authorized to trade (by the brokerage margin department) is a mistake.

A good rule of thumb for sizing the number of contracts in a potential trade is to never trade more than 5% of your e-mini trading account balance. For many smaller accounts, this will mean trading only one contract. Emotionally, trading a mere one contract is a difficult task, especially when the new trader has purchased a program that has conditioned his or her thinking to get-rich-quick. Because the margin department has authorized you to trade up to 5 contracts doesn’t mean it’s a good idea to do so.

Why?

Should you go on a run of losing trades, save 4 in a row, you can easily lose 60 to 70% of your e-mini trading account balance. Needless to say, this is a less than desirable outcome. In my opinion, most traders trade to many contracts because they have been conditioned to believe their trading system is infallible and all they need to do is follow the system and riches will come pouring their way. As I said earlier, 5 to 7% of your account balance is the maximum you should risk on any given trade.

3. Most Traders Are Not Familiar with the Psychological Factors in Trading.

I like for my first trade to be successful because it puts me in the right frame of mind. Of course, there are days when you might be stopped out on your first trade and find yourself with a significant negative profit/loss position. At this point, it is not unusual for novice traders to over trade or trade too many contracts in order to catch up.

Regardless of the day’s prior trades, is essential to maintain your trading methodology and money management system. There is always a temptation when you are having a losing day to up the number of contracts in an effort to regain your footing in positive territory. This is always a bad idea. Traders also tend to increase their risk tolerance by initiating lower probability trades when they are having a losing day.

It is essential to trade your account, not let your account trade you. It is entirely possible to salvage a day after an initial losing trade. To be sure, you are more likely to produce positive results when you stay true to your system. Negative account balances for a trading session are notorious for compounding problems. You can easily turn a modest loss and to disaster by trading outside the parameters of your e-mini day trading system.

In summary, we have discussed the importance of staying true to your system and not letting outside factors put you in the market before you are ready; over trading, poor money management, and unfamiliar psychological feelings all contribute to trader failure. In short, be fully prepared to trade before you begin trading in earnest; there is no need to rush into e-mini day trading before you are ready.

- About the Author: Click here for free nightly videos analyzing the day’s trading action (a $297 value). Article Source

It goes without saying that every e-mini day trader prefers to trade a trending market, they are the easiest to trade and have the highest probability trades for success. Unfortunately, markets tend to trend only about 30% of the time. The remainder of the trading session consists of normal backing and filling operations, sometimes referred to as “market noise.”

As a e-mini day trader, I prefer to avoid trading during periods of market noise over trending markets, which only makes sense. But there are times that the market presents some trading opportunities during periods of consolidation. From the onset, though, I’ll recommend very conservative e-mini trading techniques in consolidating markets as the price action can be very unpredictable. Specifically, I would trade fewer contracts than normal and make sure that a trade does not run away to the downside from your profit target. Of course, this is easier said than done and it takes extreme vigilance to successfully day trade periods of market noise. But it can be done.

1. The optimal e-mini consolidating market will follow a repetitive serpentine pattern rising and falling at nearly the same level in each cycle. Using strict scalping technique, a e-mini day trader can do quite well as the market tends to stay in these cycles for extended periods of time. The technique to day trade this type of market is relatively easy; you would place a support and resistance lines at the peak of each cycle and the trough of the cycle. I generally set my stops tighter than usual when employing this technique and set my profit targets to whatever length the cycles are averaging. Obviously, if the peaks are occurring 12 ticks from the average trough, it would be unwise to set your profit target at 26 ticks. Using oscillators, you can generally target the peaks and troughs and trade them accordingly, either long or short. I have made a good deal of money trading and this particular style.

2. If is the consolidation period is narrowing into a wedge shape, I will often put buy and sell orders one point above and below the range of the narrowing market. In doing this, I can take advantage of any breakout or breakdown that will occur. Consolidating markets that show a tendency to narrow are often followed by a significant breakout or breakdown. By putting a buy order above the established range, you will pick up the trade if it breaks out long. Just the opposite, by establishing a sell order just below the range of the consolidation, you will pick up a breakdown in the day trading action and potentially capitalize on it. This day trading technique can be very effective, but does carry some risks should the market widen just a bit and then return to the consolidation pattern.

3. There are some consolidating patterns that are indecipherable in terms of patterning. My recommendation is to avoid trading this sort of consolidating market, as the traders have not established any sort of discernible pattern during the period of market noise. At best, this type of consolidation pattern is treacherous. As I said, I avoid market noise that displays a high degree of randomness in the price action.

In summary, all e-mini day traders prefer to trade trending markets. But there are some non-trending markets that display enough movement and enough predictability where a trader can be effective in choosing potential trades. However, all consolidating patterns are not created equally and highly random consolidation patterns should be avoided.

- About the Author: Sign up for our free daily e-mini instructional videos and get a feel for the method and techniques the E-mini Trading Professor employs. The videos are free and there is no obligation so click here and start learning immediately. You can learn to day trade emini contracts at an affordable price using time-tested techniques that give potential traders an excellent chance for success. Article Source

This morning the second quarter Gross Domestic Product(GDP) results were released by the Commerce Department. The second quarter Gross Domestic Product reported was 2.4%. This is sharply lower from the revised first quarter number of 3.7%. Economists had expected the second quarter number to be 2.5%. Therefore, today’s number was not a big surprise. What does this all mean for the market?

Well, today the market is starting out under pressure with the SPDR S&P 500 ETF (NYSE:SPY) trading lower by 1.06 to $109.20. Most commodity stocks are under pressure this morning and this is a sign of deflation. Leading commodity stocks such as Cliffs Natural Resources Inc (NYSE:CLF), and Southern Copper Corp (NYSE:SCCO) are trading lower and remain under pressure. Remember when the U.S. Dollar Index is trading higher on the trading session this will often push the commodity stocks lower. Therefore, always keep a dollar chart open as most professional traders will key off this chart. Remember when the dollar is higher the stock market indexes will deflate. Should the dollar decline or sell off the market will inflate higher.

Since the July lows the markets have surged higher climbing about 10.0 percent from that level. However, since July 16th, the major indexes have been very choppy and volatile. This type of volatile action could be expected going forward. Please remember to keep an eye on the U.S. Dollar Index as that chart will generally give traders a good indication of where the stock indexes are trading. This morning the U.S. Dollar Index is trading higher by 0.15 cents to $81.79 and the market is obviously trading lower.

- About the Author: Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets. Article Source

Despite the harsh economic climate that has mired the economies of the world in a difficult and painful financial malaise, for many in the world of investing, business is grinding on as usual. With the erratic roller coaster ride that has been the Dow Jones Industrial averages of late, some observers are openly questioning the sanity of many investors, and wondering aloud how and why many of them continue to risk fiscal life and limb in a dour, abysmal bear market such as this. The answer is surprisingly simple. There is still money to be made, profits to had, and investors cannot take advantage of it from the investing sidelines.

To make money on the market, an investor needs to be in the market. And though some headlines lately make it seem as though the economy is hemorrhaging value each and every trading session, the truth is many investors are still making a good profit and have managed to lead their portfolios to growth, even in this tough economy. The secret is actually fairly simple itself. Most are finding great success through the proper use and implementation of stock market trading software that analyzes the market conditions in relation to their portfolios looks for ways to seek optimization. But how does it work?

Stock Market Trading Software

The center of this lies in the fact that the software is a special configuration of algorithms that compile and analyze the data produced by the stock market each and every day. Comparing these sets of data to the results for an investor’s particular portfolio, the software looks for trends, triggers and signals that may optimize the investor’s holdings. And it works for both the positive and the negative. These software algorithms can look for ways to increase profits and value, and they also examine the data for danger trends and signals as well. All of the data is used to compile a comprehensive recommendation when these triggers or trends are discovered, in order to help you make the most of your investments.

Even in these tumultuous economic conditions that have prevailed over the past couple of years, stock market trading software has far outperformed human brokers and investment fund managers, and have managed to still return for the investors using them a measure of positive growth. Many investors are beginning to experience the wonderful potential of this amazing and powerful software that will dominate investing in the 21st century.

- About the Author: Regardless of the direction of the market, we view every year as an opportunity to make money. By using our market timing software to navigate the markets‘ short, medium, and long term trends, you have the potential to make money every year! Absolute Return Trading Systems Inc. provides a subscription based, proven and authenticated market trading system . Article Source

Most day traders are concerned about liquidity in contracts they trade. It is important to be able to enter and exit a trade at the exact point of your choosing, and thinly traded contracts and thinly traded markets can be treacherous in this respect. It’s reassuring to see the heavy volume always present during a normal trading session on the ES contract, and it gives traders confidence to know that their entries and exits will be promptly filled.

On the other hand, the YM contract doesn’t seem nearly as heavily traded as the ES and can appear to be thin at some price points. I trade both contracts, and prefer to trade the YM. Further, I am often asked which contract a novice trader should begin with and my answer is always the same, the YM.

Why the YM?

I usually have fairly scientific reasons in my trading technique, but I have to admit my preference for the YM is not objective nor is it scientific. There is no shortage of anecdotal stories that claim the ES contract is heavily influenced by black box trading. While that seems a plausible theory, I have found little or no evidence to support the theory. There are traders that also claim the ES contract is manipulated by some of the larger brokerage houses, but I have found little or no evidence to support this theory either. I can say that the ES contract periodically makes some inexplicable moves which I don’t always understand, but that is hardly grounds for developing any sort of conspiracy theory as it relates to trading.

I have had numerous novice traders solicit me for advice and the first thing I generally ask them is what contract they are trading. If it is the ES contract, I promptly recommend they switch to the YM contract and the results are nearly always the same. They began to trade better, and they began to profit. Many would claim this as evidence of the diabolical nature of the ES contract, but in my mind I believe the YM is simply an easier contract to trade.

There are several reasons for this belief, and I think the most important one is that less experienced traders tend to congregate on the YM contract. Conversely, I think the more experienced traders tend to gravitate towards the ES contract. The obvious result of this gravitation is less experienced traders trading the YM contract. For that reason alone, the YM would be an obvious choice for traders new to the trading business.

Further, and this is just my personal opinion, the YM contract tends to react in lockstep to the cash market. Unlike the ES contract, which can deviate at times from the cash market, the YM market does not often display this behavior. Is it because newer traders are trading the YM? I don’t know, perhaps.

The one thing I can say for sure is that newer traders tend to perform better on the YM contract as opposed to the ES contract. I realize my explanations above probably raise more questions than they answer. Though my observations would confirm that there is some reason the YM is not as difficult to trade as the ES. I wish I could point out the precise reason this phenomena of occurs, but I cannot. But I do like the results novice traders have on the YM, and I suppose that should be good enough.

- About the Author: I am a long time retail and institutional trader who now only trades part time, usually in the morning. I enjoy writing informational articles about my style of trading so others may benefit. Would it be convenient to receive valuable trading tips every night in your email? You can sign up for our free video series by Clicking here These videos contain advanced trading strategies and will enhance your trading knowledge immeasurably. Best of all, they are free! So get your free videos and start trading like the pros. Article Source

You have a responsibility to be prepared mentally each day you choose to day trade.  Many traders shun the emotional realities of trading, and this aspect of trading is among the most important. Recent findings in scientific studies reveal, unequivocally, that a traders emotional state during a trading session may be the single most important factor in determining whether a trader has a successful day or loses money.

In my experience the best way to quiet a group of chatting traders is to ask them about their emotional preparation to trading.  For a variety of reasons, traders are reluctant to discuss how they feel, at the emotional level, during their trading.  Whether the root cause of the this phenomena is vanity, inability or reluctance to share emotional tendencies, or a societal norm for traders to be mentally “tough” is unclear.  What is clear, however, is the incontrovertible evidence that states that your mental and emotional state has a profound effect on your ability to trade.

In a past article I discussed outside factors like television, radio, and music that effect our emotional state, and in this article I will discuss internal emotional considerations each trader must conquer.  There is a feeling that some traders are gifted, that they are natural born traders.  It is my opinion that some traders have an emotional profile that makes them successful, as oppose to a technical style.  As a chaos theory trader, I am convinced the market is, at the macro level, random and difficult to predict.  At the micro level, certain patterns occur over and over.  That being said, most of the successful trading systems share some common characteristics and very little has occurred in the past ten years that we could consider revolutionary breakthroughs in trading technique.  To be sure, no trading style has in any way pulled ahead of the pack of mainstream traders.  Sure, we have new styles of trading, but the ultimate judge of trading successfully is profits and losses, and the new styles have done anything but disproved the long standing tenets of trading with their profits and losses.

So what kind of emotional situations hinder a trader?

Emotional attachments to a trading position are among the toughest to recognize and rectify.  For a variety of reasons, traders invest their emotions into a particular trade in the belief they are right, despite overwhelming evidence to the contrary.  For example, a trader may decide the market is going to go in a certain direction for a certain period of time and positions his trade to capitalize on this perceived winning trade.  Before long, the market begins to move counter to the trader’s theory, but the emotionally invested trader does not take corrective action because he is convinced he is right.  Despite his indicators telling him he wrong, despite the market price action that is telling him he is wrong, the trader has invested himself so deeply in his conviction he is right he rides a trade straight into his stops. (if he has stops)  When I think I know what the market is going to do, especially if it is contrary to what my chart is telling me, I know it is time to stop for the day.

What causes this phenomena?

The need to be right, basically.  The literature on this topic suggests there are more than one factor that contributes to emotional attachment to a given trade.  Losing trades are a part of day trading, and how you handle a trade at the emotional level will determine whether or not you can trade successfully.  You are not going to always be right, and an individuals ability to accept that he/she was wrong and move on to a new trade is essential.  It sounds very easy, but it’s not.  Many traders are unable to adjust if they are in a losing trade, it unnerves and rattles them.  I have watched many traders battle this problem and most are unable to conquer emotional investment in a trading position.  For some, their need to be right simply overwhelms the intellect they possess.  While emotional investment in trading positions is not necessarily the end of a traders career, it takes a considerable amount of work to overcome.

Another serious emotional issue with traders is overconfidence, especially on a day with many winning trades.  This is a tough issue to deal with.  As you make good trades throughout the day, you become convinced that any trade you make will be a winner.  It’s a great way to give back all you have earned, which is not uncommon.  This usually occurs on a trending day when nearly all your trades will be profitable if you stay in the trend.  Of course, the next day may well be a trend in the opposite direction, or a consolidating market, and your overconfidence becomes a distinct liability.  You must be nimble in your trading, and not lock in on ideas to the point where you are not able to properly focus on the market.  Overconfidence is terminal to a trading account.  You must stay a student of the markets, not the master.  There are few masters of the market, just observant and nimble traders.

In summary, we have looked at the effects emotions have upon trading futures.  Many traders tend to become emotionally involved in the positions fail to adjust to the trading situation.  They have an intense need to be right.  Other traders become confident, which is a great attribute to have if you are in a sporting contest with another opponent.  On the other hand, the market is inanimate and overconfidence is poorly deployed in the trading environment.  Your ability to recognize the emotional demands of trading will, more or less, be a major contributor to your success.

I endorse a state of the art trading program for beginners at Trading Concepts, Inc It’s an awesome product that will have you well on your way to success. Plus, it has a money back guarantee…you have nothing to lose and thousands to gain.

Article Source:http://www.articlesbase.com/day-trading-articles/more-on-emotional-considerations-in-your-day-trading-1730844.html